Accounting for Bonds Issued at a Premium
Response to the following problem:
Sealon Corporation issued $100,000 of 10%, 10-year bonds at 102 on April 1, 2009. Interest is payable semiannually on April 1 and October 1. Sealon Corporation uses the calendar year for financial reporting.
1. Record the necessary entries to account for these bonds on the following three dates. (Use the straight-line method to amortize the bond premium.)
a. April 1, 2009.
b. October 1, 2009. c. December 31, 2009.
2. Show how the bonds would be reported on the balance sheet of Sealon Corporation on December 31, 2009.